Banking
Banking Services: Cheque Return Fee Only If Customer at Fault
The Reserve Bank of India (RBI) has asked banks to levy cheque return charges only if the customer is at fault. RBI said that cheques requiring re-presentation, without any recourse to the payee, should be presented at the immediate next clearing not later than 24 hours and customers notified through SMS alert, email, etc.
 
RBI has found that the issue was resulting in ‘unsatisfactory customer service’. It was considered necessary to streamline the procedure across all banks. RBI has advised banks to reframe their cheque collection policies (CCPs) for better customer service. Banks are expected to indicate the timelines for realisation of local/ outstation cheques in their CCPs and the charges for cheque returns are expected to be levied upfront with prior notice to the customers.

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Chain-Money Schemes: Only 500 Firms Operational?
More than 500 entities and their promoters are feared to be running thousands of illicit collective investment schemes (CIS) across the country, although just one is registered with SEBI for such business, according to the regulator. Under CIS, which is regulated by SEBI, contributions made by investors are pooled and invested and for generating profits, income, dividends, etc. SEBI has zeroed in on about 500 entities and their promoters and directors who might be running numerous CIS operations under different names. West Bengal and other states in the eastern and north-eastern region are among the most fertile grounds for such schemes.
 
Most of them are doing businesses that are in the nature of Ponzi or chain-money schemes. They promise high returns but actually pay investors from the money collected from new investors. Once the chain stops, the schemes go bust and the operators scoot. They are always hand-in-glove with local politicians and the police.
 
These schemes have a veneer of legitimacy; the promoters show that they are in real estate, hospitality, agriculture and education. According to Moneylife, SEBI has no clue about how many such schemes are running. They run into thousands, according to VC Sajjanar, a deputy inspector general police in Andhra Pradesh who has been crusading against them.

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RBI imposes restrictions on bank lending against gold

The central bank further said that banks cannot give advances against gold Exchange Traded Funds and units of gold mutual funds

In a bid to restrict the demand for gold, the Reserve Bank of India (RBI) Monday imposed curbs on banks and NBFCs for providing loans against gold coins as well as units of gold ETFs and mutual funds.

 

“...it is advised that while granting advance against the security of specially minted gold coins sold by them, banks should ensure that the weight of the coin does not exceed 50 grams per customer,” RBI said in a notification to banks.

 

Also banks have been asked to ensure that the amount of loan to any customer against gold ornaments, gold jewellery and gold coins (weighing up to 50 grams) should be within the board approved limit.

 

As specially minted gold coins sold by banks may not be in the nature of bullion or primary gold, there would be no objection to the bank granting loans against these coins, it added.

 

The central bank further said that banks cannot give advances against gold Exchange Traded Funds (ETFs) and units of gold mutual funds.

 

Banks are currently permitted to grant advances against gold ornaments and other jewellery and against specially minted gold coins sold by banks.

 

However, no advances can be granted by banks for purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold exchange traded funds and units of gold mutual funds.

 

The government has taken several steps recently, including raising import duty, to curb the inbound shipments of gold. RBI too had put restrictions on banks on gold imports, which has led to forex outflow and widening of the current account deficit (CAD).

 

While there may not be any objection to grant of advances against specially minted gold coins sold by banks, there is a risk that some of these will weigh much more, thereby circumventing the RBI’s guidelines regarding restrictions on grant of advance against gold bullion, it said.

 

In a separate notification, RBI said no advances should be granted by NBFCs for purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold ETF and units of gold mutual funds.

 

Worried over widening CAD, finance minister P Chidambaram last week had indicated that the government and the RBI could take more steps to check gold imports.

 

“Some more steps, if necessary, would have to be taken, but I appeal to the people of India to contain their passion for gold,” he had said.

 

Gold imports jumped by 138% to $7.5 billion last month, the highest so far this year, pushing up the trade deficit to $17.7 billion.

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